The US Commerce Department said it has finalized the $6.6 billion subsidy to Taiwan Semiconductor Manufacturing Company, the world’s top chipmaker, for a manufacturing plant set up in Phoenix, Arizona.
The contract with TSMC‘s U.S. unit, following a preliminary deal announced in April, is the first major award to be finalized under the $52.7 billion program created in 2022. It comes just weeks before the president elected Donald Trump, who has criticized the program, will take office, they report Reuters e OF.
In April, TSMC agreed to expand its planned $25 billion investment to $65 billion and add a third factory in Arizona by 2030.
The Taiwanese company will produce the world’s most advanced 2-nanometer technology at its second factory in Arizona, production of which is expected to begin in 2028. TSMC has also agreed to use its most advanced chip manufacturing technology called “A16” in Arizona .
“When we started, there were a lot of detractors who said maybe TSMC would do 5 or 6 nanometers in the United States,” Commerce Secretary Gina Raimondo said in an interview. “They’re actually making their most sophisticated chips in the United States.”
The financing to TSMC also includes up to $5 billion in low-cost government loans. Under the agreement, TSMC will receive money upon reaching project milestones. The Commerce Department expects to provide at least $1 billion to TSMC by the end of the year, a senior official told reporters.
TSMC agreed to forgo share repurchases for five years, subject to certain exceptions, and to share any excess profits with the U.S. government under a “profit-sharing agreement.”
TSMC CEO CC Wei said the deal “helps us accelerate the development of the most advanced semiconductor manufacturing technology available in the United States.”
Congress passed the Chips and Science Act in 2022 to boost domestic semiconductor production, which Raimondo called essential to getting investment from TSMC and other chips. No cutting-edge chips are currently being produced in the United States.
“It didn’t happen on its own… We had to convince TSMC that they would want to expand,” Raimondo said, adding that officials also had to convince American companies to buy chips made in the United States. “The market does not take national security into account.”
The US Department has allocated $36 billion for chip projects, including $6.4 billion for Samsung in Texas, $8.5 billion for Intel and $6.1 billion for Micron Technology. It is also working to finalize those agreements before Biden leaves office on Jan. 20.
The settlement follows news that the Department ordered TSMC to stop shipping advanced chips to Chinese customers.
Raimondo did not confirm that the Department had issued a directive to TSMC, but said the United States must play both offense and defense with China.
“Investing in TSMC to expand here is a crime: the defense is to make sure that neither TSMC nor any other company sells our most sophisticated technology to China and violates our export controls,” Raimondo said, adding that he was not saying that TSMC had committed any infringement.
“We take national security seriously and look at every potential issue, whether it involves companies we subsidize or not,” he added.
Maddalena Ingrao
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